Landslide forces layoffs at Kennecott Utah Copper

While we still don’t have all of the answers, we have reached a point where additional measures are necessary to reduce operating costs. Additional changes to reduce our operating costs may be required as operating plans are finalized in the coming months.—Company spokesman Kyle Bennett

SOUTH JORDAN — Kennecott Utah Copper will lay off workers as a result of a massive landslide last month that crippled its Bingham Canyon Mine.

The layoff will take place this month as part of cost-cutting measures across the operation, company spokesman Kyle Bennett said in a statement Thursday.

"At this time, we do not have numbers or a time frame in May when it will take place," Bennett said. "It is always difficult when jobs are lost because of the direct impact it has on individuals and families."

Wayne Holland, United Steelworkers International staff representative, said, "We do know the numbers will be significant and that they will commence in late May or early June."

Workers were informed of the impending job cuts late Thursday afternoon, which Holland said brought "a lot of anxiety, and a lot of people are in consternation about what the future is going to bring."

Scott Mullins, president of the United Steel Workers Local 392, said he remains optimistic the layoff will be minimal, but it's too soon to know.

"Right now, it's just a big question mark of what's going to happen and what the plans are," Mullins said.

An enormous wall of dirt rumbled down the northeast section of the open-pit mine April 10. No workers were injured, but roads, buildings and vehicles were damaged.

Kennecott earlier said it expects production at Bingham Canyon to drop at least 50 percent in 2013.

During a media tour of the mine last week, Kennecott president and CEO Kelly Sanders acknowledged that the slide would impact workers, but he would not say whether that meant layoffs. The company had asked 2,100 employees to take vacation or unpaid time off.

"We must reduce our cost in accordance with the production reduction," Sanders said. "As a result of that, there will be some difficult decisions for us."

Bennett said the company is still in the early stages of recovering from the slide.

"While we still don’t have all of the answers, we have reached a point where additional measures are necessary to reduce operating costs. Additional changes to reduce our operating costs may be required as operating plans are finalized in the coming months," he said.

Some mining industry analysts estimate getting the mine fully operational could take at least $1 billion.

Sanders last week would not say how much the landslide has cost the company to date, nor would he speculate on recovery costs. Kennecott, owned by London-based international mining company Rio Tinto Group, has not released any financial information related to the slide.

Holland said union leaders and company officials will discuss pensions, early retirement and other ways to reduce the overall impact on the workforce. Mullins said they will also talk about Kennecott buying concentrate from other mines to run through the refinery process as a way to maintain jobs.

Kennecott last laid off workers in 2003 when copper prices bottomed out. Holland said he recalls about 200 people lost their jobs.

Bingham Canyon produced about 25 percent of the nation's copper and 2 percent worldwide in 2010 and 2011, Sanders said. Output slowed last year. In addition to copper, the mine produces gold, silver and molybdenum, a metal used in steel alloys.